PATRICIA WILZ, GUARDIAN OF JON PATRICK FLOURNOY, AN INCAPACITATED PERSON v. KENNETH W. AND JUNE FLOURNOY (Other)

SUPREME COURT CASES

Laws-info.com » Cases » Texas » Supreme Court » 2007 » PATRICIA WILZ, GUARDIAN OF JON PATRICK FLOURNOY, AN INCAPACITATED PERSON v. KENNETH W. AND JUNE FLOURNOY (Other)

State: Texas

Court: Supreme Court

Docket No: 06-0913

Case Date: 06/29/2007

Judge: reverse the court of appeals judgment and render judgment that the entire farm i

Plaintiff: PATRICIA WILZ, GUARDIAN OF JON PATRICK FLOURNOY, AN INCAPACITATED PERSON

Defendant: KENNETH W. AND JUNE FLOURNOY (Other)

Preview:PATRICIA WILZ, GUARDIAN OF JON PATRICK
FLOURNOY, AN INCAPACITATED PERSON v.
KENNETH W. AND JUNE FLOURNOY (Other)
IN THE SUPREME COURT OF TEXAS
No. 06-0913
Patricia Wilz, Guardian of Jon Patrick Flournoy, an Incapacitated Person, Petitioner,
v.
Kenneth W. and June Flournoy, Respondents
On Petition for Review from the
Court of Appeals for the Tenth District of Texas
PER CURIAM
On behalf of her son, Jon Flournoy, Patricia Wilz sought to impose a constructive trust on property purchased by her
ex-husband and his new wife. The trial court imposed a constructive trust on the entire property, but a divided court of
appeals limited the trust to a 35 percent undivided interest. Given the evidence presented at trial and the jury s
findings, the court of appeals erred in limiting the constructive trust, and we reverse.
Patricia Wilz and Kenneth Flournoy divorced in 1973, and Kenneth was awarded custody of their son, Jon. In 1987,
Jon suffered incapacitating injuries in an automobile accident. Kenneth, individually and on Jon s behalf, sued Ford
Motor Company. In a 1991 settlement, Kenneth received $379,300 on Jon s behalf and $95,000 personally. As
guardian of Jon s person and estate, Kenneth purchased stocks and bonds for Jon s benefit. Subsequently, Kenneth and
his new wife, June, purchased a 110-acre farm for $153,049, paying $49,365.50 in cash and executing a note for the
balance. The note called for monthly payments of $961. Between 1991 and 1999, the Flournoys withdrew several
thousand dollars from Jon s account, many installments of which were roughly $960. By the end of 2001, the
Flournoys had depleted Jon s account, and they institutionalized him in a state mental health facility.
In 2005, Jon s biological mother, Patricia Wilz, became his guardian, and she sued the Flournoys on Jon s behalf for
conversion, breach of fiduciary duty, and constructive fraud. Patricia traced several checks drawn on Jon s account to
the Flournoys personal account. When questioned about these checks, the handling of Jon s funds, and the source of
the funds used to purchase the farm, the Flournoys each invoked the Fifth Amendment privilege against self-
incrimination. The Flournoys sole evidence regarding the funds consisted of Kenneth s pretrial deposition, where he
said he used his settlement money for the farm s down payment and that $50,000 remained outstanding on the note.
When questioned about the truth of this testimony, Kenneth again invoked the Fifth Amendment.
The jury found that Kenneth breached his fiduciary duty and committed constructive fraud and that the Flournoys
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converted Jon s property with malice. The trial court therefore imposed a constructive trust on the entire farm.
The court of appeals agreed that Wilz had met her burden to impose a constructive trust on the entire farm, and the
burden shifted to the Flournoys to show which funds came from their own accounts. 201 S.W.3d 833, 836 37.
Nonetheless, it held that the trial court abused its discretion because Kenneth s deposition testimony proved he paid the
down payment from personal settlement funds and that $50,000 was outstanding on the note. The court of appeals
estimated Jon s interest in the farm as the initial purchase price minus the down payment minus the amount
outstanding. Thus the court of appeals concluded that Jon was entitled to a constructive trust on an undivided 35
percent of the farm.
A party seeking to impose a constructive trust has the initial burden of tracing funds to the specific property sought to
be recovered. Meyers v. Baylor Univ., 6 S.W.2d 393, 394 95 (Tex. Civ. App. Dallas 1928, writ ref d); see Eaton v.
Husted, 172 S.W.2d 493, 498 (Tex. 1943) ( [T]he beneficiary may follow the trust property, and claim every part of
the blended property which the trustee cannot identify as his own. ) (emphasis in original). Once that burden is met, the
entire . . . property will be treated as subject to the trust, except in so far as the trustee may be able to distinguish and
separate that which is his own. Eaton, 172 S.W.2d at 498 99 (emphasis in original). The trial court and court of appeals
agreed that Patricia traced Jon s funds to the farm; thus, the burden shifted to the Flournoys to demonstrate what
portion of the farm s purchase price came from their own funds. See 201 S.W.3d at 839.
The Flournoys bet the farm (as it were) when they failed to obtain a jury finding on their affirmative claim that part of
the purchase money came from personal funds. Therefore, this claim is waived on appeal unless they conclusively
established it. See T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 23 (Tex. 1992) (citing Tex. R. Civ.
P. 279). The Flournoys only evidence on this point was Kenneth s deposition testimony. Kenneth, however, was an
interested witness, so his testimony, even if uncontradicted, presents an issue to be determined by the trier of fact.
Gevinson v. Manhattan Constr. Co., 449 S.W.2d 458, 467 (Tex. 1969). The factfinder may treat an interested witness s
testimony as conclusive if it is clear, direct, and positive and there are no circumstances tending to discredit or
impeach the same. Id. But here, Wilz attempted to contradict Kenneth s testimony, and the jury in this civil case was
free to draw negative inferences from the Flournoys repeated invocations of the Fifth Amendment. See TEX. R. EVID.
513(c); Tex. Dep t of Pub. Safety Officers Ass n v. Denton, 897 S.W.2d 757, 760 (Tex. 1995) (citing Baxter v.
Palmigiano, 425 U.S. 308, 318 (1976)). The Flournoys failed to secure a jury finding on their claim, and the jury was
free to disregard Kenneth s deposition testimony as not credible. Therefore, the trial court did not abuse its discretion
in imposing a constructive trust on the entire farm.
Accordingly, we grant Patricia Wilz s petition for review, and without hearing oral argument, Tex. R. App. P. 59.1,
reverse the court of appeals judgment and render judgment that the entire farm is subject to a constructive trust, see
Tex. R. App. P. 60.2(c).
OPINION DELIVERED: June 29, 2007
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